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LOGISTICS SECTOR It Offers Significant Advantages for the Localization of Regional in URUGUAY Distribution Centers

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LOGISTICS SECTOR It Offers Significant Advantages for the Localization of Regional in URUGUAY Distribution Centers Investment Opportunities REPORT Uruguay is the quintessential regional hub for the Southern Cone. LOGISTICS SECTOR It offers significant advantages for the localization of Regional IN URUGUAY Distribution Centers. Competitive Intelligence October 2016 1. Why invest in the Logistics Sector in Uruguay? ........................................................................ 3 2. Economic importance of the Logistics Sector in Uruguay ......................................................... 4 2.1. Sector Description .............................................................................................................. 4 2.2. Features of the Logistics HUB subsector ............................................................................ 5 3. Uruguay Logistics HUB .............................................................................................................. 7 3.1. A Destination for location of Regional Distribution Centers .............................................. 7 3.2. Goods in transit, transshipment and re-shipment ............................................................. 8 4. Strategic Location .................................................................................................................... 10 4.1. Regional Ports System ...................................................................................................... 10 4.2. The Paraguay-Paraná and Uruguay waterway ................................................................. 11 5. Infrastructure .......................................................................................................................... 12 5.1. Roads and Railways .......................................................................................................... 12 5.2. Port infrastructure ............................................................................................................ 15 5.3. Airport infrastructure ....................................................................................................... 16 6. Regulatory Framework ............................................................................................................ 18 6.1. Promotion and Protection of National and Foreign Investments Act.............................. 18 6.2. Other institutions related to the sector ........................................................................... 19 6.2.1. Free Zones Act ........................................................................................................... 19 6.2.2. Free Ports and Airports ............................................................................................. 20 6.2.3. Customs Warehousing .............................................................................................. 22 6.3. Temporary Admission ...................................................................................................... 23 6.4. Industrial Parks ................................................................................................................. 24 6.5. Public Private Participation Act ........................................................................................ 25 7. Institutions and actors related to the Logistics Sector ............................................................ 26 7.1. National Institute of Logistics (INALOG) ........................................................................... 26 7.2. Other institutions related to the sector ........................................................................... 27 8. International Positioning ......................................................................................................... 28 9. Progress towards a Logistic Uruguay ...................................................................................... 28 9.1. Infrastructure ................................................................................................................... 29 9.1.1. Port of Montevideo ................................................................................................... 29 9.1.2. Logistics Port Puntas de Sayago ................................................................................ 30 9.1.3. Port of Nueva Palmira ............................................................................................... 31 9.1.4. Port of La Paloma (Rocha) ......................................................................................... 31 9.1.5. Port of Fray Bentos - Development Works ............................................................... 31 9.1.6. Paraguay-Paraná Waterway (HPP in Spanish) .......................................................... 32 9.2. Regulatory framework ..................................................................................................... 32 9.2.1. Foreign Trade Single Window (VUCE) ....................................................................... 32 9.2.2. Nuevo Código Aduanero (CAROU) New Customs Code (CAROU) ............................. 33 Uruguay at a glance (2015) ......................................................................................................... 34 Main economic indicators 2010-2015......................................................................................... 34 Logistics Sector Report Uruguay grew at an average annual rate of 5% between 2005 and 2015, making it one of the fastest growing countries in the region. The main rating agencies (Fitch Ratings, Moody's and Standard & Poor's) maintained the investment grade of Uruguayan debt and their favorable view of the country, reflecting the confidence generated by the country's institutional framework and the economic policy in place. Uruguay has a comprehensive legal framework that provides the broadest guarantees and clear rules, in addition to granting attractive incentives to investors. In particular, the Investment Promotion and Protection Act 16,906 passed in 1998 provides for an attractive scheme for investment in Uruguay. Foreign investment receives by law the same treatment as domestic investment. Foreign Direct Investment (FDI) has reached record levels, allowing Uruguay to rank among the first recipients of FDI in South America (5.3% of GDP) in the last decade. Uruguay is the quintessential regional hub for the Southern Cone and offers significant advantages for the location of Regional Distribution Centers (RDC). Uruguay has a privileged geographical location, with two ports at the main gateway to the South Atlantic coast, which allow access to the Paraná-Paraguay-Uruguay waterway. It is possible to reach the wealthiest cities of the continent over a period ranging from 12 to 96 hours by land and between one and three hours by air. Uruguay’s regulatory framework offers important advantages for logistics operations, with significant incentives for the installation of RDCs and the handling of goods in transit. This includes Free Zone, Free Ports and Airports, Customs Warehousing and Temporary Admission schemes. Uruguay has an adequate infrastructure, a modern airport and the most dense road transport network in Latin America. Its ports, with cutting-edge infrastructure, are the only ports in the South Atlantic coast operating under the Free Port system. The logistics sector has its own institutional structure in Uruguay. In 2010, the National Institute of Logistics (INALOG in Spanish) was created by law, functioning as a space for public-private participation and coordination for the development of the sector. 3 [email protected] | www.uruguayxxi.gub.uy | @UruguayXXI Logistics Sector Report The expansion of globalization and the growing internationalization of economies resulted in a significant development of opportunities in the logistics sector worldwide. Indeed, access to new markets, and adequate and timely access even more so, entails significant costs to companies, thus reducing costs and improving the quality of response have become key differentials for the competitiveness of countries and companies. In this context, the logistics sector in Uruguay has been one of the most dynamic sectors in recent years, being a pioneer in the incorporation of new technologies, the application of potential offered by the Internet and an important support to industrial activity, through just- in-time logistics. According to available estimations, the logistics sector accounts for between 4% and 5% of Uruguay's GDP1. This, along with its importance for the development of international trade and as support for industrial activity, shows the strategic nature and great economic potential of this sector. In Uruguay, the sector encompasses several activities developed at ports, airports, road networks, specialized logistics companies, located strategically or within logistics parks. Logistics and administrative services include2: Traditional logistics services: Includes transport and necessary transfers from ports and airports in the region, reception and control, storage and preparation of orders for shipment to final destination. Logistic value-added services or semi-industrial activities: Packaging, repackaging, mixing of chemicals and other facilities are incorporated, with delivery adapted to the needs of end customers ("customization") or requirements (standards) of the countries of destination. Supply chain logistics coordination services: Customer's operations with logistics suppliers are coordinated, with emphasis on the coordination among production plants abroad, shipping lines, cargo agents,
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